Social Media ROI: Does Your Hotel Have a Competitive Advantage?

By Oliver Sohn Co-Founder, Seventh Art Media | April 10, 2011

Co-authored by Doug O'Reilly, Co-Founding Partner, Seventh Art Media

Recently, New York City was co-host to one of the largest global social media conferences: Social Media Week. The conference is a great platform to measure the pulse of the industry and for us that meant identifying those aspects of social media that the hospitality industry needs to focus on the most for 2011. The unanimous answer this year: Return on Investment (ROI)! This represents a significant shift in how social media has matured since last year with less focus on media metrics (follower growth, friends, network reach, sentiment) and more on business metrics (ROI).

A thorough understanding of the top and bottom-line implications of social media is the most objective method of assessing its true value and is the key to your ability to leverage it for a competitive advantage. Thus, in this article we take a look at how to evaluate social media ROI and assign an actual dollar-value to some of the social media networks that hotels have established.

The first step for any successful social media program is to create a goal-oriented strategy that establishes and prioritizes possible outcomes and measures. Jumping into social media without any idea of where you want it to take you (at least initially) completely undercuts your subsequent ability to assess its return. In other words, if ROI wasn't considered important from the beginning, then it is going to be hard to properly determine it after the fact. However, once a plan is in place the goals and results can then be used to readily demonstrate top-line performance, efficacy and return.

Getting a goal-oriented strategy in place is usually an exercise in narrowing your focus in the face of innumerable possibilities. On the flip side, one of the common challenges in this process is that many hoteliers look at social media as a vertically aligned function, a silo, instead of focusing on the benefits of horizontal integration across their business structure. In fact, the benefits of social media are only realized when it serves as a means for the integration of multiple brand facets and is allowed to organically realize exponential amplification or viral velocity outside of traditionally defined verticals. In order to keep it all manageable, a hotel can begin by focusing on returns and efficiency across three different disciplines that make up a hotel's social media value chain:

  1. Sales/Revenue Management: Incremental revenue generated with new guests and existing customers (top-line) as well as improvement of sales margins/ADR yield (bottom-line).
  2. Marketing & PR: Efficiency of cost per brand impression for your hotel and avoidance of less efficient and more expensive lead generation channels.
  3. Customer Service: Operational savings and added value for your guests.

With this focus in place, your ability to measure and assess the contributions of your social media efforts will mirror your ability to evaluate any other form of marketing and customer experience efforts. This begins with a full cost assessment and subsequent measurement of impacts as the social media program cycles through campaigns and ongoing engagement.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.